BoU on Spot: why state house anti corruption unit is investigating Shs6b paid to city lawyers

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Margaret Kasule, Director Legal Services BoU

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By Our Reporters

Two directors at Bank of Uganda are under investigations by State House Anti-Corruption Unit for allegedly paying Shs6 billion to two city lawyers includes Benedict Ssekabira, of Financial Markets Development Coordination (FMDC) and Margaret Kasule, director legal services.

According to sources, the two directors are alleged to have sanctioned the payment of Shs6 billion to Timothy Masembe Kanyerezi and David Mpanga. Sources further allege that although this money was released as legal fees but its intended purposes is to cover all the legal loopholes in the case of Crane Bank Limited takeover and subsequent during receivership.

The two lawyers represented BoU and the payment for their services has been ongoing until parliament probing committee, Committee on Commissions, State Authorities and State Enterprises (COSASE) that investigated BoU over the controversial sale of seven commercial banks between 1993 and October 20, 2016.

In December 2017, the Commercial Court disqualified city lawyers Mr Kanyererezi Masembe and Mr. David Mpanga from the Sh397 billion Sudhir Ruparelia’s case against Bank of Uganda (BoU), also citing conflict of interest.

In his ruling delivered on December 21, 2017, the head of the commercial court division, Justice Wangutusi stated that Mr. David Mpanga of A.F. Mpanga Advocates and Timothy Masembe of MMAKS Advocates acted in violation of the Advocates (Professional Conduct) regulations.

Last month, it was alleged that BoU released Shs4 billion as part of the balance on Shs20 billion to the same lawyers. However, what is intriguing investigators is why paying that entire amount to the lawyers and yet some of the cases are jointly handled by BoU own lawyers.

Sources say that the payment could be part of the ploy to falsify accountability in the case of Shs478 billion.

Auditor General John Muwanga carried out a special Audit on the Shs478 billion Injected into Crane Bank Limited by Bank of Uganda. The report it pinned the central bank officials for failure to account for Shs478 billion it injected in Crane Bank Limited (CBL).The audit was carried out as ordered by COSASE on December 20, 2018.

The BoU officials during their exit meeting with COSASE failed to account for Shs478 billion they say they spent as liquidity support and other intervention costs on CBL receivership between October 20, 2016 and January 25, 2017.

Muwanga in the report says out of Shs478 billion injected into CBL, a sum of Shs157.9 billion had been recovered from Dfcu bank and CBL Non-Performing assets leaving an outstanding balance of Shs320.8 billion at the time of writing the report. CBL at the time it was sold to Dfcu bank at Shs200 billion only needed about Shs157 billion to remain afloat.

Sources further say that because of the above inquiry State House Anti-Corruption Unit, several meetings have been ongoing between several people pinned in the AG report. It is alleged that former executive director in charge of supervision Justine Bagyenda and former deputy governor, Louis Kasekende ordered the two directors to release money to the two lawyers.

An extra Shs12.2 billion was also spent on service providers including MMAKS Advocates who pocketed about Shs4.2 billion. The latest report on Shs478 billion spent on CBL did not however audit the Shs12 billion paid by BoU to service providers.